the stockholders equity section of tvx company on february 4 follows. common stock-$20 par value, 150,000…

the stockholders equity section of tvx company on february 4 follows. common stock-$20 par value, 150,000 shares authorized, 57,000 shares issued and outstanding $1,140,000 paid-in capital in excess of par value, common stock 420,000 retained earnings 548,000 total stockholders equity $2,108,000 on february 5, the directors declare a 2% stock dividend distributable on february 28 to the february 15 stockholders of record. the stocks market value is $36 per share on february 5 before the stock dividend. 1. prepare entries to record both the dividend declaration and its distribution. view transaction list journal entry worksheet < 1 2 record the declaration of a 2% stock dividend. note: enter debits before credits. date general journal debit credit february 05

the stockholders equity section of tvx company on february 4 follows. common stock-$20 par value, 150,000 shares authorized, 57,000 shares issued and outstanding $1,140,000 paid-in capital in excess of par value, common stock 420,000 retained earnings 548,000 total stockholders equity $2,108,000 on february 5, the directors declare a 2% stock dividend distributable on february 28 to the february 15 stockholders of record. the stocks market value is $36 per share on february 5 before the stock dividend. 1. prepare entries to record both the dividend declaration and its distribution. view transaction list journal entry worksheet < 1 2 record the declaration of a 2% stock dividend. note: enter debits before credits. date general journal debit credit february 05

Answer

Explanation:

Step1: Calculate the number of shares for stock dividend

The number of shares issued and outstanding is (n = 57000). The stock - dividend percentage is (r=2%). The number of shares for stock dividend (=n\times r=57000\times0.02 = 1140) shares.

Step2: Calculate the amount for each account in the journal entry for declaration

  • Retained Earnings: The market value per share is (M = 36). The amount debited to retained earnings (=1140\times36=$41040)
  • Common Stock Dividend Distributable: The par - value per share is (P = 20). The amount credited to common stock dividend distributable (=1140\times20=$22800)
  • Paid - in Capital in Excess of Par Value, Common Stock: The amount credited to paid - in capital in excess of par value (=1140\times(36 - 20)=1140\times16=$18240)

The journal entry for the declaration (February 5) is:

Date General Journal Debit Credit
February 5 Retained Earnings 41040
Common Stock Dividend Distributable 22800
Paid - in Capital in Excess of Par Value, Common Stock 18240

Step3: Journal entry for distribution (February 28)

When the stock dividend is distributed, we transfer the amount from "Common Stock Dividend Distributable" to "Common Stock". The journal entry for the distribution (February 28) is:

Date General Journal Debit Credit
February 28 Common Stock Dividend Distributable 22800
Common Stock 22800

Answer:

For the declaration (February 5): Debit Retained Earnings (41040), Credit Common Stock Dividend Distributable (22800) and Credit Paid - in Capital in Excess of Par Value, Common Stock (18240). For the distribution (February 28): Debit Common Stock Dividend Distributable (22800) and Credit Common Stock (22800).